Darcey’s brain dump on all sorts of things on her favorite subject….Money! Email: darcey.martin@d2dsolutions.com

Mortgage–The Meaning Behind it, don’t get sucked in…..

This was something interesting I had heard awhile back, and came to mind again the other day when I was speaking to a client about being debt-free. The conversation revolved around them believing they were debt-free if they just had a Mortgage and a Car Payment. Meaning if they didn’t owe credit cards they were debt-free. So I brought up the Mortgage, people have evolved to the point of believing that they will always carry a Mortgage, that it is a given, that we just accept that as fact. Which brings me back to what I had heard, which made me chuckle at the time, but once it sunk in, it wasn’t so funny. If you break down the word, going back to the 1500-1600’s, they are the old French words Mort, “dead” and gage “pledge”. When I had heard this gentleman speaking on this, he was referring to today and he changed it up a bit and said it has now become “a pledge until death”, since in our society it is becoming the norm to move to a different house or re-fi so many times in our adult lives that at the rate we are going we will be retiring with a Mortgage which is the last thing anyone should be doing. Society is so into this that most people are convinced that they shouldn’t pay down their mortgage because they use it as a tax deduction. Whoever started that, is now probably a millionaire, it is such garbage. I have probably said this before but it is worth repeating. We had 25K in interest deductions this year. Due to deleveraging (paying down debt) and lower interest rates we will be paying probably around 15K in interest for 2009, that is 10K that stays in our pocket, yes we will have some tax ramifications since we don’t have as many deductions BUT we will also have 10K sitting in our pocket and I can tell you our tax liabilities won’t go up by 10K, it isn’t dollar for dollar so we are ahead of the game by paying down our Equity Line/Mortgage. I have clients that have payoff calculation worksheets that are coming in between 4-11, the highest one I have is probably 15 years, that is crazy, of course they all hold 30 year mortgages, but we are going to get them paid off faster than that. Of course their consumer debt will be wiped out prior to starting in on a Mortgage since in most (not all) cases their Mortgage is their lowest interest rate when we factor in tax-deductible benefits.

So don’t let your Mortgage be “a pledge until death” for you, come see me and let’s get you a plan to get you debt-free….for real, including that Mortgage.